Author Archives: Jeremy Lichtman

About Jeremy Lichtman

CEO of Lichtman Consulting. Formerly CTO of MIT Consulting. Serial entrepreneur, software and web developer.

Better way to manufacture clothes?

The following series of ideas occurred to me while holding a loose thread on my jacket, and trying to decide whether to try breaking it on the spot, or to wait until I had a pair of scissors handy.

The manufacturing of clothing is still largely a low tech industry (unlike the making of the fabric itself), where rooms of poorly paid workers cut and sew together garments (I’ve linked to some articles below, some of which have great photos showing what a modern sweatshop looks like). Continue reading

Google, Mobile, Bandwidth and Cost-Per-Click

In case you didn’t hear, Google just missed on estimates for the quarter. There’s a good analysis on Breakout (here). What it boils down to is that mobile traffic is growing rapidly, and mobile users pay a lot for bandwidth, so are less likely to click on ads.

I’ve written previously that several factors are going to push big tech companies into the telco industry. The exorbitant cost of mobile bandwidth is another one to add to the list.

There is a  chasm opening between existing telcos – who make their money selling bandwidth – and manufacturers of mobile devices, who largely make money from their users consuming that bandwidth.

If Google makes money selling ads, and the cost of connecting to the internet via a cellphone prevents users from clicking on those ads, then Google is going to be under pressure to reduce the cost of connecting. A similar factor holds true for Apple and its App Store – yes, you can connect to WiFi from home, but the overall usability of mobile devices improves dramatically if you can use it everywhere, transparently.

I suspect a few things are going to happen:

  • More open feuding between device manufacturers and telcos
  • Some new joint ventures between them, particularly with smaller telcos (maybe Softbank isn’t crazy?)
  • Possibly a big tech company actually buying a telco (although how that would get through antitrust, I don’t know)
  • A big push to find other ways for users to connect to the internet.

Stay tuned. It should be interesting.

3D Printing Large Items

I’ve been fascinated for a few years now with cheap 3D printers like the RepRap and MakerBot Replicator. One of the issues with these printers is that they can only create relatively small items. I believe that a relatively small change to how they are constructed could help with that. Continue reading

Distributed Mass Production

The usual disclaimers apply: I can’t tell whether this thought is original, the technology isn’t quite there yet, and I’ve only done a partial economic analysis.

In the near future, many people are likely to have 3d printers in their homes. These printers will likely only be used on occasion. The installation of software similar to the [email protected] project could allow these printers to be utilized during downtime for mass production of small products, in exchange for payment to the printer’s owners.

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Why I’m bearish on big tech

The following short post contains some medium-term (2 – 5 years) predictions that are completely contrary to what many well-known market analysts think.

As a result, I’m going to put some weasel-words here first:

  • I have absolutely no idea what stock prices for any given company will be, in any time-frame.
  • My comments below cover a fundamental issue, and barring specific catalysts, may not have any bearing on share prices anyhow.
  • The companies concerned could very well adjust their strategies, making my comments irrelevant.
  • If you trade based on anything I say, I bear no responsibility whatsoever!

I’m currently rather bearish on large cap technology companies, over the course of the next few years. The technology industry itself will probably do pretty much as it always does – various people will innovate, new products will come on the market, and there will be winners and losers – as always. This pertains primarily to the dozen or so very large, well known technology companies that are well covered by market analysts.

My thesis is as follows:

  • The success of Apple has resulted in virtually all of these companies getting “hardware envy”. Examples include Google, Microsoft, Amazon and likely several others too.
  • As a result, they’re all planning on building mobile devices, and it looks like many of them are betting the farm on their success.
  • Hardware is a very different business to software and services, and it tends to have much larger capital requirements, and much lower margins. It is somewhat like the auto industry that way.
  • Mobile devices in particular tend to be sold via telcos, who have significant power in setting prices. Even Apple is discovering that fact.
  • Mobile devices are also heavily regulated. Anybody can assemble a PC and sell it, or build software or sell stuff online. The cellphone industry has to work with government regulators.
  • The mobile market is currently divided into high end devices that make most of the margins (i.e. iPhone for now, previously folks like Nokia, and possibly Samsung in the future), and low end devices that have razor-thin margins, and require massive volume. There’s deflationary pressure on both markets as well, driving prices (and profits) downwards.
  • Pretty much everybody who wants a cellphone now has one. The new device market is currently focused on the upgrade cycle (people tend to get a new phone every 2-3 years or so, unless they’re me), and on moving people with old-style handsets to smartphones. This has been a high growth industry, but I’m fairly sure that at some point it will grow at the same rate as GDP or population growth.
  • There’s really only room for a few winners in this market. Ask RIM or Nokia.

Adding this all up: currently the big tech companies do compete with each other to some extent, but they also have niches of their own that have provided them with relatively high margins. The push into mobile is going to turn all of them into direct competitors, with all that this implies.

There are going to be some interesting side-effects.

Many of these companies have been purchasing wireless frequency bandwidth for years. Amazon has recently got into that game, probably in order to be able to deliver better service to their Kindle devices in a fragmented telco market.

I believe that the push into mobile will force many of these companies to also become cellular service providers, largely in order for them to regain control over their own pricing structures.

This is a bad thing.

There’s a name for a company that is a software publisher, a consumer electronics company and a telco: conglomerate.

That word has had unpleasant connotations since the 70’s. Its awfully hard to run a single successful business. Running several different businesses under the same roof, each with their own (very different) business cycles, margins, capital requirements etc is a mug’s game.

Add in the recent run-up in stock prices, partially due to bullish overflow from Apple, and partially due to the flight to perceived safety, plus the resulting lower profitability from this strategy, and I suspect that the result will be a sustained period of poor results for this sector.

What will cellphones look like in 5 years time?

What will cellphones and other mobile devices look like in five years time? I’ve been pondering this question for a while now, and this post has gone through numerous iterations.

It would be very hard to determine what mobile gadgets will be like over a longer period, but given the current rate progress (and market adoption), the following points of speculation might be valid in five year’s time:

  • The rise of head-mounted displays like Google Glass means that mobile devices won’t need to have large screens (or possibly any screens), which means they will no longer be forced into the flat, rectangular packaging of today’s pads and cellphones. A screenless gizmo that connects wirelessly to your glasses could look like anything – a belt buckle, an old-school Walkman, or something completely new.
  • Battery life will no longer be a major concern. Between improvements in batteries that are close to market availability, Apple’s patenting of tiny fuel cells for phones (not sure I’d want hydrogen in my pocket, but anyhow), and several competing wireless energy technologies, I suspect that how your devices are powered will change rapidly in the next few years. This is a good thing. Batteries haven’t changed much in a hundred years, and they’re one of the least reliable technologies in use.
  • We’re likely to see more experimentation with input devices. I don’t think keyboards and mice are going “away” just yet, but better verbal input, gesture recognition and other experiments are likely to be available in the market.
  • The performance gap between laptops and their smaller cousins will close. New chip technology seems to be focused heavily on power consumption, so it is likely that the types of chips used in mobile gadgets will be similar (or possibly identical) to those used in laptops. One implication may be that fully-fledged operating systems will win out over less powerful, specifically mobile ones. That could mean, for example, that iOS and OSX will converge, and that Microsoft may actually be crazy like a fox. In the longer term, there are still many companies that would prefer to push processing power into “the cloud”, and have mobile devices primarily act as dumb terminals, but I think the short term will see things largely going the other way.
  • We may see some new form factors – if most of what you need can be built into a pair of glasses, and only some people need things like more storage, or faster co-processors, there may be a market for small add-on devices that communicate via Bluetooth with a primary device, and that contain things like SSD hard drives, or high-powered GPUs.
  • We may see a further move away from cellular technology to “WiFi plus Voip”. I already use Skype and Google Voice more frequently than I use my cellphone’s phone number. If free (or merely very cheap) WiFi becomes ubiquitous, why pay for cellular service? If the ENUM system takes off (it is still largely experimental), you’ll pay a few bucks per year for your phone number (similar to domain registration), and forward it however you want, to whatever devices you wish. I suspect this will further erode the customer base of cellular service providers (to the benefit of companies like Apple).

What does this all mean?

  • It would take a lot for me to be able to do serious work from a mobile device. A full-sized keyboard and mouse are rather useful when writing code, or typing up a lengthy document. If my cellphone had a docking station, that might change, but I suspect that (for certain kinds of users) laptops aren’t going away any time soon.
  • The companies that will win in this space are going to be the ones that bring the full power of a laptop to this smaller form factor. The ability to do – for example – professional graphic design requires several things: a really good screen, dextrous interface device(s), lots of processor power, lots of storage space, great software, and sufficient battery life to not be tied to a wall socket (although Starbucks is usually helpful in this regard). You can almost do that now on an iPad, and I could imagine a designer in a few year’s time standing in the middle of a park, wearing a pair of Google Glasses and an input glove, and generally looking like they were conducting an orchestra.
  • Increased competition between companies in the mobile space means that there’s likely to be a lot of experimentation over the next few years, in order to try to find niches that are profitable. Expect the rate of change to accelerate, and lots of oddball products that ultimately wind up being dead ends. This looks similar to the early days of the “luggable” computer to me.
  • Expect some amazing new collaborative software for these new, powerful mobile devices. The future is not big transparent multi-touch screens like in Minority Report; instead it will be 3D collaborative spaces that are viewed via, and interacted with by multiple people wearing glasses.

How Facebook can win in mobile

Lots of speculation that Facebook is going to try (again) to build a mobile phone. I understand why they feel this is necessary – they’re already losing ad revenue due to people accessing the site via mobile apps – but as many others have commented, this is unlikely to work (and could cost them billions of dollars in the process).

Here’s a simple alternate plan for how they could win mobile revenue, and create a mobile platform, without building any hardware:

1. Extend their existing mobile app so that it allows users to run existing Facebook applications from within it.

2. Create new tools to allow app developers to take advantage of this capability. Creating mobile apps is still a lot of hard work, and walled gardens like iOS make it hard for developers, so a clean, cross-browser-compatible, Facebook app-based mobile platform could really help developers. Plus if its cleanly integrated into the mobile app, there’s no reason why users who are already utilizing it won’t adopt it as well.

3. Build out their existing ad network to target these new capabilities.

The above would be a lot of hard work, but IMHO it would have a much better chance of success, and would cost a fraction of what they would spend buying up hardware companies. Plus it plays well to their existing strength in platform development.

Update: Actually, I can think of one strategic reason why Facebook would want to get into the phone business, although I’m not certain that it is sufficient. If such a phone contained near field payment technology, then Facebook Credits could be used at the “final mile”. Such an approach would probably imply the purchase of a company like Square.

The (slightly misanthropic) Rules of HTML Compliance – Part 3

This is the third and final part of the series. If you haven’t read the other parts, you can find them here and here. The following is a heavily edited version of an internal document that I wrote a number of years ago to try to standardize internal web development. Continue reading

The (slightly misanthropic) Rules of HTML Compliance – Part 2

If you haven’t read part one, this is a highly edited version of an internal document, on the topic of creating a company standard for html, css and javascript work, with some of the (justified) language toned down.

Part 1 of the post may be found here.

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Can Yahoo! be turned around?

Again with the CEO? Seriously Yahoo!?

Copyright Flickr Creative Commons - Mykl Roventine

Whenever I’ve spoke with former Yahoo! employees in the past few years, the overriding theme seems to be anger and disappointment. One does not feel emotional in this way about a company that cannot achieve; it is the mismanagement, lost opportunities and loss of direction of a team that used to consider itself a world-leader that results in such a temperament.

The question remains though, regardless of what happens in the near-term with their current CEO. Can (or should) Yahoo! be turned around, or should it be torn apart and sold for scrap? Continue reading